A judgment of the Higher Regional Court (Oberlandesgericht)
Frankfurt/Main of May 25 2004 has caused unrest in the German
market regarding securitization or sales of non-performing
loans.
Judgment of the Higher Regional Court
The Higher Regional Court Frankfurt/Main has ruled that the
obligation to preserve banking secrecy creates a prohibition of
assignment of loan receivables that has absolute effect in relation
to non-entrepreneurs and invalidates the assignment.
In Germany, there seems to be disagreement as to whether this
judgment entails a general prohibition to assign non-performing
loans. The prevailing view seems to be that an assignment is still
possible if the data relating to the assigned claim are delivered
to a data trustee and that assignments of undisputed claims remain
possible.
Legal situation in Austria
The Austrian Supreme Court (Oberster Gerichtshof - OGH) (OGH
19.1.1989 ÖJZ 1989/73 [EvBl]) has ruled that it is not the purpose
of banking secrecy pursuant to §38 of the Austrian Banking Act
(Bankwesengesetz - BWG) to restrain the disposal of loan
receivables due to banks.
Objections against the assignment of receivables that were based
on banking secrecy have been dismissed in this decision. The
Supreme Court held that a bank cannot be deprived of the right to
assign claims against customers, which necessarily presupposes that
the assignee obtains knowledge about the claim. In addition, the
assignee needs to be provided with the means to enforce the claim
(including the debtors' data).
However, the Austrian Supreme Court (OGH 19.9.2000 RdW 2001/14)
has also ruled that attorneys at law may not assign their claims
for fees because this assignment would violate the attorney's
obligation of secrecy pursuant to §9 subpara 2 of the Austrian Act
for Attorneys at Law (Rechtsanwaltsordnung). The obligation of
secrecy thus prevails vis-à-vis the marketability of claims
for fees. In its decision of October 10 2002 the Austrian Supreme
Court (OGH 10.10.2002 RZ 2003/11) has expanded this principle to
members of other liberal professions (freie Berufe) that are
subject to a professional duty of secrecy (for example, accountants
and auditors) - their claims for fees were held not to be
assignable as well.
Supported by the decision of the Supreme Court of January 1
1989, it is safe to assume that loan receivables due to banks may
still be assigned. This argument is even stronger in cases in which
the underlying agreements and/or the general terms and conditions
of the respective bank provide for the possibility to assign
receivables. Still, a certain risk remains that the Austrian
Supreme Court could put the obligation of secrecy of liberal
professions on a par with the banking secrecy pursuant to
§38 BWG.
Assignment not restrained
It follows that particular attention should be paid to
mechanisms aiming at avoiding the infringement of banking secrecy
in securitization transactions and when assigning claims out of
non-performing loans. Facility agreements should contain provisions
providing for an exemption to observe the banking secrecy in case
of assignments and securitizations.
Martin Ebner and Johannes Türk